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EU lawmakers said to reach provisional deal on bank bill

By Jim Brunsden

European Union lawmakers struck a tentative deal on legislation to create a single agency for handling euro area lenders in crisis after the European Central Bank warned that failure would be “close to suicide.”

Negotiators including Dutch Finance Minister Jeroen Dijsselbloem and European Parliament legislators found a provisional agreement on the Single Resolution Mechanism bill after about 16 hours of talks in Brussels that ran until after 7 a.m. Thursday morning. French Finance Minister Pierre Moscovici said Thursday that details would emerge shortly.

“There was an agreement over night. It should be confirmed this morning,” Moscovici said on France Info radio. “This is a major advance.”

EU parliament members involved in the talks will now consult with their political groups on the outcome of the talks before a press conference later this morning, according to a tweet from the parliament’s Economic and Monetary Affairs committee. The accord still needs to be formally approved by national governments and by the full European Parliament to take effect.

The deal will be a signature achievement for EU leaders meeting in Brussels later today. Leaders have been working for nearly two years to establish a euro-area banking union to repair the currency bloc’s financial architecture and guard against further crises sparked by contagion between banks and sovereign borrowers.

Dutch Finance Minister Jeroen Dijsselbloem shepherded the debate through the night, stepping out of negotiations periodically to phone his euro area counterparts. At one point, talks were on hold for more than an hour to wait for a response for German Finance Minister Wolfgang Schaeuble and other ministers, said Sven Giegold, a German lawmaker representing the assembly’s Green group in the talks.

The SRM is part of an EU effort to prevent future financial crises by pooling responsibility for euro-area banks, a project known as banking union. In a first step, the ECB will fully assume supervision of the 18-nation currency bloc’s lenders in November.

ECB Executive Board member Yves Mersch said last week that not having the SRM “would be very close to suicide.” The parliament and the bloc’s finance ministers proposed competing visions of SRM in December.

The agreement retains key elements of a plan put forward last year by Michel Barnier, the EU’s financial services chief, including the creation of a central resolution board backed by a 55 billion-euro ($77 billion) fund financed by industry levies. It also allows the EU to meet a self-set deadline of concluding talks in time to conclude work on the law ahead of EU elections in May.

The deal on the SRM sets out a blueprint for the overall system. Further talks will be needed in the months ahead on implementing measures to flesh out some aspects, including on the methods to be used for calculating banks’ individual contributions to the central fund.

The marathon talks were described by Sharon Bowles, chairwoman of the parliament’s Economic and Monetary Affairs Committee, as the longest ever on an EU financial-services law. The overnight meeting was the last one scheduled before a March 26 deadline set by Greece, which holds the EU’s rotating presidency.

Dijsselbloem and his Greek counterpart, Yannis Stournaras, began discussions with top parliament lawmakers at 3 p.m. in Brussels Wednesday, with all key points on creating the SRM still open. [Bloomberg]